What, Me Worry? Last Minute Taxes

Updated for Tax Year 2014

OVERVIEW

According to the Internal Revenue Service, 20-25% of all Americans wait until the last two weeks before the deadline to prepare their tax returns. At that late date, there are only two things you can do: File your taxes pronto, or request a tax extension.

They say only two things are certain: death and taxes. Add procrastination to the list. Even though everyone knows the deadline for filing federal individual income tax returns is April 15, many people still wait until the last minute to do anything about it.

According to the Internal Revenue Service, 20-25% of all Americans wait until the last two weeks before the deadline to prepare their returns. At that late date, there are only two things you can do: File your taxes pronto, or request an extension.

Not that there’s anything inherently wrong with waiting.

If you owe taxes, you might want to earn interest on your money right up until the minute before it departs your bank account.

Maybe you've been too busy with your business to keep track of the time.

Or maybe you just plain forgot.

Whatever the reason, to avoid scrambling at the last minute, experts recommend preparing in advance by keeping yourself organized year-round with all-important documents — including receipts — maintained in one place.

Organization is key

Having everything in one place — even if it’s just a shoebox — will help make preparation of your income tax return easier. Some of the documents that might be required to complete the process include:

Form W-2 (your employer must mail the form, which shows your earnings and taxes withheld, by Jan. 31)

Form 1098, Mortgage Interest Statement, which shows mortgage interest paid on a loan for your own home

and receipts for all purchases and payments, including those for business, healthcare and education.

You will also need your Social Security number and, if you are filing jointly, you will need the Social Security number of your co-filer. Social Security numbers are also required for all listed dependents for whom you are claiming a dependency exemption.

It also helps to have a checklist of deductions that you might forget in your rush to file your return. Check out our Tax Preparation Checklist for an easily-printable list of documents to collect before preparing your taxes.

File faster online

Once you're ready, experts recommend filing your taxes electronically. Doing so can mean a more accurate tax return, a faster refund and — if every minute counts — the luxury of last-minute filing. Since 1990, nearly 1 billion people have filed their taxes electronically, according to the IRS. The majority of individual taxpayers — 70%— file electronically, either on their own or via a tax preparer.

TurboTax makes it easy to prepare and file your taxes online, which is the fastest way to get your money if you’re expecting a tax refund.

Avoid last-minute mistakes

The biggest problems with tax returns are often the easiest to prevent because they usually occur through carelessness or hurry. Even the simplest mistakes, however, can delay a refund.

The three most common mistakes made by flustered filers are:

math errors (easily prevented with a calculator or tax software)

incorrectly written Social Security numbers (be sure to proofread)

and failure to sign or date the tax return

Extending the inevitable

To request an extension for filing your return, use Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, which is available for download at IRS.gov. Extensions are generally granted automatically and you do not have to explain in your initial request why you are seeking one. The only requirement is that the extension request must be filed no later than midnight on April 15.

Again, TurboTax can help here. You can file a tax extension for free using TurboTax Easy Extension. It only takes a few minutes to get 6 months of extra peace-of-mind.

Each year, approximately 7% of U.S. taxpayers — around 8 million people — request an extension. There is one caveat:

An extension of time to file is not an extension of time to pay taxes owed, so be sure to pay your estimated balance — or as much of it as possible — even if you request an extension.

Form 4868 offers a variety of payment options. You can use a calculator like TaxCaster to estimate the taxes you may owe.

If you’re worried that you can’t pay what you owe, the IRS recommends filing your taxes or extension request and then calling to discuss setting up a payment plan. The IRS also offers a payment agreement application on its website.

No matter what the reason for the wait, April taxes don’t have to bring May tears. Stay prepared year-round, consider filing online, and get familiar with the automatic extension form to avoid seasonal panic. Then sit back and welcome spring.

Last-Minute Tax Fun Facts

Answer: Your filing date does not affect whether you are entitled to a refund. According to the IRS, however, over 70% of tax returns filed before April 1 receive refunds, while 61% of late filers end up owing money.

Education credit & deduction finder

W-2 earlyavailability

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